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Why Malaysian multinationals need a cohesive tax technology strategy and must move beyond quick fixes.
In brief
- Quick fixes in tax technology are no longer sufficient as Malaysia adopts e-Invoicing and aligns with BEPS 2.0 Pillar Two.
- A cohesive tax technology strategy reduces compliance risks, integrates data and transforms tax into a source of insights.
- Malaysian multinationals that invest in cloud, analytics and governance today can future-proof their tax function and gain a competitive edge.
Why Malaysian multinationals need a cohesive tax technology strategy and must move beyond quick fixes
By Julian Wong, Partner, Global Compliance and Reporting, Ernst & Young Tax Consultants Sdn. Bhd. and Nurazrin Radzi, Senior Manager, Technology Consulting, Ernst & Young Consulting Sdn. Bhd.
Introduction: Malaysia’s tax landscape transformed
Over the last decade, Malaysia’s tax system has transformed from a largely paper-based, annual exercise to a more digitalized system with regular real-time reporting.
The Inland Revenue Board of Malaysia (IRBM) is rolling out a mandatory e-Invoicing system, which will be central to its digital strategy, alongside enhancements to corporate tax reporting through the Malaysian Income Tax Reporting System (MITRS). The Companies Commission of Malaysia (SSM) has launched the Malaysian Business Reporting System (MBRS), enabling companies to submit financial data digitally, in eXtensible Business Reporting Language (XBRL) standard.
Our ASEAN neighbors are observing closely. Singapore, for example, launched its voluntary e-Invoicing platform, InvoiceNow, in 2025 while the Philippines have recently introduced Revenue Regulation 11-2025 in February to expand and clarify their e-Invoicing system.
The dual challenge — complying with increasingly digital and complex regulations while maintaining transparency with investors and regulators — is increasingly onerous. Yet, many companies still rely on legacy systems and fragmented processes to perform their reporting.
In this environment, point solutions — a tax reporting module here, a transfer pricing database there — provide temporary relief but do not provide a holistic long-term solution. A sustainable approach requires a cohesive, long-term tax technology strategy that integrates data, automates compliance from a common and consistent dataset as well as equips tax professionals with real-time insights.
Why point solutions fall short
Most Malaysian multinationals have developed their tax systems incrementally. Each new law triggers adoption of another tool or solution, creating a patchwork of disconnected platforms, spreadsheets and manual workarounds.
A large conglomerate operating in multiple countries may:
- Use multiple enterprise resource planning software (ERPs) from acquisitions.
- Maintain separate value-added tax/Sales Tax and Service Tax (VAT/SST) reporting tools for different jurisdictions.
- Store transfer pricing data in standalone applications.
- Compile tax data manually for reporting and forecasting.
This results in data inconsistencies, a need for frequent reconciliations and limited visibility. New legislation triggers reactive patches rather than strategic solutions, and understanding the tax position and risk profile of the group at any point in time becomes more challenging.
The case for a cohesive tax technology strategy
A cohesive strategy treats tax as a data challenge, which adds value and planning opportunities to the organization, and not just a compliance obligation. It positions the tax function as a partner to finance and the business, supported by integrated systems and standardized processes. Benefits include:
- The impact of regulatory changes can be easily identified and addressed.
- Standardized data and processes so there is consistent information across various reporting streams, freeing tax professionals for analyses.
- Ready to scale to new jurisdictions, products or business models.
- Ability to provide insights that influence investment and pricing decisions.
An effective tax technology strategy transforms tax from a cost center into a strategic business enabler.
Risks of not having a cohesive strategy
Malaysian multinationals without a holistic technology roadmap face ongoing tax compliance risks.
1. Data silos and inconsistent reporting: Disparate systems create conflicting tax data and reporting. When tax authorities adopt real-time reporting, inconsistencies are immediately exposed, increasing audit risk.
2. High compliance costs and wasted time: Every new tool or workaround introduced requires licensing, training and tech support. More importantly, this may result in contradictory reporting outcomes where staff spend more time reconciling than analyzing data. Extracting data from multiple sources to address a tax audit can be an expensive nightmare.
3. Missed deadlines and errors: Manual handling takes time, impacts job satisfaction, increases mistakes and penalties and gives rise to greater risk of reputational damage.
4. Limited insight for decision-makers: Boards and chief financial officers need insights on tax rates, cash forecasts and regulatory exposure. Fragmented data slows reporting and diminishes the tax function’s strategic influence.
5. Weaker security and governance: Multiple tools create cyber vulnerabilities and inconsistent access controls, risking sensitive tax data.
Core elements of a long-term cohesive tax technology strategy
Key components include:
1. Strategic alignment with business goals: Integrate tax into the broader finance and digital strategy, for example, tax is considered in ERP upgrades or digital finance initiatives.
2. Integrated data architecture: Consolidate multiple ERPs and systems into a single source of truth that is ready for tax compliance and further analytics. Such standardization also enables effective replication across jurisdictions or when needing to incorporate new regulations.
3. Scalable, cloud-based platforms: Cloud solutions reduce infrastructure costs, enable real-time collaboration and allow faster deployment of updates to meet new regulatory changes and support better artificial intelligence and robotic process automation (AI/RPA) integration.
4. Embedded governance and security: Role-based access, automated audit trails and alignment with corporate IT standards protect sensitive tax data.
5. Advanced analytics and dashboards: Provide real-time visibility and predictive insights to understand the impact of regulatory changes or business decisions.
6. Future-proofing for emerging technologies: Enable AI for anomaly detection, RPA for automation and blockchain for transaction traceability that will make it quicker and easier to attend to tax audits and queries.
Summary
The era of reactive, bolt-on tools is over. Malaysia’s continued shift towards tax digitalization, e-Invoicing and global initiatives like Organisation for Economic Co-operation and Development (OECD) Inclusive Framework on Base Erosion Profit Shifting’s (BEPS) Pillar Two make a cohesive tax technology strategy essential. A proactive approach requires more investment initially, but the alternative is far more costly: higher compliance risks, fragmented data, lost insights and a tax function that is constantly firefighting and not capitalizing on opportunities to add value to the organization. By embracing integrated data, automation, analytics and strong governance today, Malaysian multinationals can transform tax from a compliance obligation into a strategic asset. Those who act now will not simply comply with today’s rules — they will be at the forefront of tax in Malaysia and beyond.